On June 4th, 2018, a highly decorated and respected police officer used his knowledge as a law enforcer to commit one of the most heinous crimes in cryptocurrency history. The foundation for this crime was a single Bitcoin transaction.

You and I both trust police officers enough to give them power over us. We give them the ability and the responsibility to keep us safe every day we interact with them. But what happens when a police officer who takes an oath to serve and protect is the very same officer that is plotting to tie your hands with zip-ties in a small room in the basement of a police department?

On May 13, 2019, one of America's scariest cryptocurrency crimes occurred when a highly decorated and respected U.S. law enforcement agent used all that he learned as a law enforcement officer to commit an unthinkable act. The actions of the officer will force you to think differently about everyone who wears a badge!

Let's break the details of this crime down step-by-step!

The Man Behind the Badge

Born of law enforcement pedigree, James Robert Thomas was not a rookie. He had several years’ worth of experience with the LAPD, an agency with some of the most distinguished and respected officers on the planet. As such, he had credibility, access to resources, and all the training he could want from his job. Even the people in his neighborhood probably say hello to him. Parents likely told their children “If you ever get in trouble please try to find someone like him.”

But Thomas’ behaviour behind closed doors was not representative of this image of law enforcement in any way. Instead, he liked to watch the flow of bitcoin wallets.

Thomas is believed to have been able to identify a target; an individual he believed was holding an excessive amount of bitcoin (approximately $350,000 worth). And this is where things get dark. Instead of hacking into a computer or running a detailed internet scam he used a rather “old school” method.

Remember all those words about all that great training? Well, Thomas’ experience and training did become a playbook for him, but not for helping someone.

The Kidnapping: Three Steps From Badge to Prison

Read how this appears to have transpired and recognize the extent of Thomas' planning before attempting to talk to you about it.

First: Knock the user on the head. The Minus corporation had hit a "crypto" victim with a "wrench attack" (carbon monoxide poisoning, digital assets seizure via external force). Forget firewalls & passwords, they simply come to your house and smash your head in with a wrench to force you to hand over your digital assets to them – no algorithm can help you if your head is taped up.

Second: Use authority to gain access. This is what distinguishes this from your typical burglar. He used his Police/Criminal Law background to manipulate the situation to take control; he knew how to get people to submit to him and how to intimidate them without setting off alarms immediately; he knew all about how victims behaved from studying them while at the interrogation end of the interrogation table.

Third: To execute the crime perpetrated against the victim (who was kidnapped/coerced into giving them $350,000 worth of Bitcoin). Imagine being terrified that you were watching your entire life savings vanish out of sight forever in a blockchain transaction that cannot be cancelled and there was no such thing as a bank to contact or a fraud division to contact to stop it because there is nothing you could do to resolve this other than to lose everything you will ever own again.

However, what he didn't count on is...

The Digital Trail He Couldn't Erase

The twist of this story is how the FBI and other federal law enforcement agencies track down every transaction that takes place using Bitcoin via the public ledger called Blockchain. Law enforcement agencies have made significant investments into Blockchain Forensics, turning this area into one of their most effective tools. It is estimated that Chainalysis has helped law enforcement trace over $10 billion worth of illicit activities through their analysis of Blockchain technology.

Thomas sought anonymity when he turned to cryptocurrency; he was mistaken about this.

What he considered to be an exploit was instead the product of the technology that helped him eventually be convicted.

The Bottom Line: Where the training provided him with a playbook, the judicial system had a much better playbook available to make use of.

The Conviction and What It Means for You

After Thomas was convicted in court, he finally received the accountability that the police and the legal system didn’t provide to him when they falsely arrested him for a crime he did not commit.

But this story goes much further than just serving as another headline. If you are someone who owns cryptocurrency, even a small amount, there is something you need to know. You are your own bank, and that is what decentralization is supposed to deliver. However, should you choose to be your own bank with cryptocurrency, there are risks involved as well as rewards.

The number of crimes related to cryptocurrencies has risen dramatically in the last couple of years, according to the FBI’s Internet Crime Complaint Center which reported over $5.6 billion in losses from reported crypto-related crimes in just one year. There are reports of physical crypto-related crimes (home invasion, kidnapping, extortion, etc.) that are becoming more prevalent, as opposed to being one-off events.

So what can you do?

1. Keep your holdings confidential. Do not post on social media about your cryptocurrency holdings, do not disclose to others how much cryptocurrency you own.
2. Use hardware wallets that are protected with multiple signatures.
3. Be aware that while many of the threats to your cryptocurrency holdings may be from hackers overseas, more typically the biggest risk comes from someone standing right next to you.

The Takeaway You Can't Afford to Ignore

A man took an oath to follow the law, yet he violated that oath for $350,000 in cryptocurrency. He used his job as an officer of the law to stalk and intimidate a citizen. In the end, technology — the very technology this man attempted to use against someone — was used against him to convict him.

This time, justice worked as it was supposed to; however, you need to understand that in order to protect yourself.

If you own any cryptocurrency, share this article with someone who should read it. Discuss safety and security with others, as well as your cryptocurrency portfolio.